Is the mining industry in Mongolia worth investing?

• Thesis title in English: Is the mining industry in Mongolia worth investing?
• Key words: Mongolia, mining, investing, emerging markets
• English key words: Mongolia, mining, investing, emerging markets
• Academic year of topic announcement: 2016/2017
• Thesis type: diploma thesis
• Thesis language: angličtina
• Department: Institute of Economic Studies (23-IES)
• Supervisor: PhDr. Jaromír Baxa, Ph.D.
• Author: hidden - assigned by the advisor
• Date of registration: 09.11.2016
• Date of assignment: 09.11.2016

Guidelines

This thesis aims to analyze Mongolian institutional development from centrally planned to free-market based economy, its current macroeconomic situation, international trade, and focus on mining industry, which suffers from recent plunge of Chinese demand and fall in minerals’ prices. The thesis should also evaluate political, economic, and business risk. An evaluation of government officials, mining industry experts, and investors’ interviews should be included in the thesis.
The thesis will begin with historical analysis of the country with focus on institutional change from centrally planned to free market economy and comparison of current state of institutional framework to that of other post-communist countries.
Further, relevant macroeconomic indicators, which have effect on the mining industry will be studied. Finally, a model explaining the growth of mining sector will be constructed. The financials of the key players in the industry will be analyzed and compared. The thesis will also include an analysis of regional metals markets relevant for companies in Mongolia and further risk analysis.
Contribution:
There are macroeconomic studies on Mongolia, as well as mining sector analyses, but they do not combine micro and macroeconomic effects together. Moreover many studies are outdated, which is essential in Mongolia’s case with high dependency on mining sector and recent downfall in metals prices. Strong and complicated interdependency between government and private sector is assumed. Therefore, this thesis aims to provide broad and deep analysis with an ultimate focus on whether one should invest capital into Mongolia’s mining sector.

References

Black, S. W. (2001). Obstacles to Faster Growth in Transition Economies: The Mongolian Case. IMF Working Papers, 1-19.

Blunt, P. (2014). Whose resources are they anyway? ‘Development assistance’ and community development agreements in the Mongolian mining sector. Progress in Development Studies, 14(4), 383-399.

Campi, A. (2013). The New Great Game in Northeast Asia: Potential Impact of Energy Mineral Development in Mongolia on China, Russia, Japan, and Korea. Asia-Pacific Policy Papers Series, 1-39.

Gupta, P., Li, G. B., & Yu, J. (2015). From Natural Resource Boom to Sustainable Economic Growth: Lessons for Mongolia (No. 15-90). International Monetary Fund.

Reeves, J. (2011). Resources, Sovereignty, and Governance: Can Mongolia Avoid the ‘Resource Curse’? Asian Journal of Political Science, 19(2), 170-185.

Rossabi, M. (2005). Modern Mongolia from khans to commissars to capitalists. University of California Press.
Tanai, Y., & Lin, K. P. (2013). Mongolian and world equity markets: volatilities and correlations. Eurasian Economic Review, 3(2), 136-164.
World Bank. (2010). Mongolia Economic Retrospective: 2008-2010. World Bank Publications

Preliminary scope of work

1. Motivation: I will explain why is mining industry in Mongolia worth attention
2. Institutional analysis: This section will contain an analysis of recent development and evaluation of current institutional framework in the universe of post-communist countries. Due to the importance of mining in Mongolia, I will try to assess ties between politics and business and analyze associated risks.
3. Macroeconomic analysis: I will examine which macroeconomic indicators may affect Mongolian mining industry, examine Mongolian international trade with focus on China and Russia.
4. Sectoral Analysis: I will study mining sector as a driver of the economy and look at the main players in detail.
5. Commodity markets analysis: In this section, I will analyze the effect of declined prices of relevant metals on regional supply and demand, esp. consequences for mining companies present in Mongolia and the country.
6. Synthesis: This section will put together all the results and provide the answer whether mining industry in Mongolia is a good investment opportunity.